_{September 15, 2026}

For a few years now, I have had a theory about how and why bitcoin mining would stop growing in terms of capital and electricity expenditure. I expected this dynamic to play out over many years and thus never got round to writing it clearly, but a few interesting developments over the past year suggest to me that this transition may be taking place now.

Bitcoin electricity consumption may have peaked, and bitcoin may never consume as much electricity as it did in 2024-2025. Even if that were not the case, I expect this dynamic to materialize at some point over the coming years because of mining economics and the halving. This piece presents the argument as a testable hypothesis, provides the data that would test it, and discusses the implications for the mining industry and bitcoin.

Hypothesis

The halving means that Bitcoin mining will continue to grow as long as the expected increase in bitcoin’s market value exceeds 100% over four years, or 18.92% per year. Given the dollar's chronic devaluation, the figure is a few percentage points higher when measured in dollars. Since AI has emerged as a major source of demand for electricity and data center infrastructure, the opportunity cost of bitcoin mining is rising, raising the figure a few more percentage points. Examining bitcoin price performance and mining metrics suggests that barrier has been crossed, and bitcoin mining has shifted this year from long-term growth to long-term decline.

Since the number of bitcoin mined daily drops by half every four years, the market price of bitcoin mining output would increase if the price of bitcoin increases by more than 18.92% per year plus dollar devaluation, and it would decrease if the price of bitcoin increases at a lower rate. When miners, and bitcoiners more generally, expect bitcoin’s price to rise at a rate higher than 18.92% per year plus devaluation, they are, at the margin, likely to want to increase their investment in mining, resulting in increasing capital expenditure and electricity consumption. When they expect bitcoin to not rise by 18.92% plus dollar devaluation yearly, they are likely to decrease their mining investment at the margin, and bitcoin mining as an industry would decline in terms of capital expenditure and power consumption.

Inevitably, there must come a point at which bitcoin’s market value stops appreciating by more than 100% every four years. In its early days, bitcoin was a tiny asset with very little market capitalization, and as more people became aware of it, it grew very quickly from a low base, achieving a high annual growth rate. As bitcoin’s price increases, its market capitalization similarly increases, and increasingly larger capital flows are required to increase its price by similar growth rates as before. As Bitcoin absorbs a larger share of global monetary demand, sustaining any fixed percentage appreciation requires holders collectively to desire an ever-larger absolute quantity of bitcoin-denominated real balances out of a finite stock of world savings and wealth. The rate of growth in bitcoin’s price has been slowing down over time as one would expect. And if this growth continues indefinitely, it must eventually consume all other forms of money, arriving at a point where it becomes the world’s only money, growing only in market value at the rate of growth in savings and the growth in the production of goods and services, likely in the low single-digit percentage points.

Between now and then, bitcoin’s price appreciation will hit a tipping point at which mining begins to contract.

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